GENERAL COMMENTS:
With traders apparently fully back from the holiday break, buyers stepped back into the market with significant force as strong triple-digit gains are holding in all cattle trade and lean hog futures able to trade $1 to $2 per cwt higher in nearby contracts through much of Tuesday morning. The combination of losses last week and Monday in cattle and hog trade has moved price levels to or below support levels. This upward shift has stimulated many traders who have been waiting on the sidelines for buy signals to step back into the market. It is uncertain just how much additional buyer activity is still left to uncover as market direction remains unsettled at best. December corn is down 2 3/4 at $4.528 and January soybean meal is up $0.50 at $437.1. The Dow Jones Industrial Average is up 175.80 at 35,509.27.
LIVE CATTLE:
Following strong losses over the last several days, February live cattle futures prices started the morning at the lowest price since February. The inability for the cattle complex to hold the market rebound seen in late October is creating both fundamental and technical concerns to the entire complex.
Tuesday morning buyer support flooded into all cattle trade with feeder cattle and live cattle futures holding strong triple-digit gains. The ability to retract some of the recent losses, which developed due in part to limited trade seems to be creating additional market momentum across the entire complex. February live cattle futures are holding a $4 per cwt rally at midday, although the market structure remains extremely weak and follow-through buying will be needed in order to confirm any change in market direction over the next couple of days.
Cash cattle activity remains quiet with bids and asking prices still unavailable at this point. The wild market swings over the past two days in futures trade could cause both sides to go back to the drawing board. Even though limited interest was seen Monday, mandatory reporting reported light trade in several areas $2 per cwt lower than last week's average. The wild swings in futures prices could create significant cash market shifts, and very easily delay trade activity until the last half of the week. December live cattle are $3.55 higher at $172.325, February live cattle are $4.50 higher at $173.325, April live cattle are $4.50 higher at $175.175.
Boxed beef prices are lower: choice down $0.35 ($296.90) and select down $0.08 ($267.72) with a movement of 87.59 loads (47.79 loads of choice, 23.45 loads of select, 3.87 loads of trim and 12.48 loads of ground beef).
FEEDER CATTLE:
Sharp gains flooded the feeder cattle markets Tuesday morning as traders retracted Monday's losses. Spot January futures are trading over $7 per cwt higher during morning trade as the wide market shifts has created increased market volatility. Even with these strong gains, most of last week's losses are still holding, creating a negative overall impact on the entire complex.
Current prices are holding above contract lows in the January futures, but following recent pressure are still significantly oversold with traders looking for additional hints of fundamental and technical support to move back into the market. The concern with the wide market swings is that the volatility can easily lead to additional volatility and wide market shifts. The ability to string together several days of upward price shifts would add significant confidence to the entire complex.
January feeders are $7.23 higher at $220.025, March feeders are $6.38 higher at $222.675 and April feeders are $6.23 higher at $226.45.
LEAN HOGS:
Lean hog futures have moved higher Tuesday morning following residual buying support spilling over from the cattle complex. But with lean hog futures still fundamentally and technically weak following active pressure over the last couple of weeks, this buyer support seems to be fading at midday. Although prices remain higher in all contracts, initial early gains have been cut significantly in most contract months. There remains uncertainty about the ability to spark additional volume in the market in order to stabilize the complex and rebuild on recent market pressure. Increased volume in cash hog trade and pork cutout values later in the week could help to bring some of the stability needed to the entire lean hog complex.
December lean hogs are $0.85 higher at $68.725, February lean hogs are $1.08 higher at $68.00. and April lean hogs are $0.50 higher at $74.125.
Hog Prices are lower on the Daily Direct Morning Hog report, down $1.52 with a weighted average of $59.4, ranging from $54.50 to $62.00 on 3,515 head with a five-day rolling average of $59.91. Pork Cutouts totaled 203.76 loads with 184.64 loads of pork cuts and 19.12 loads of trim. Pork cutout values are up $5.59 at $88.74.
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